Johnson v. Safeco Ins. Co. of Ind.
| Decision Date | 06 March 2017 |
| Docket Number | CIVIL ACTION NO. 3:15–CV–1939–B |
| Citation | 240 F.Supp.3d 555 |
| Parties | Corrine Michel JOHNSON and Johnathan Shane Johnson, Plaintiffs, v. SAFECO INSURANCE COMPANY OF INDIANA, Defendant. |
| Court | U.S. District Court — Northern District of Texas |
John Michael Kirchmer, Kirchmer Law Firm PLLC, Coppell, TX, Aristotelis Tristan Westerlage, John Riley Friesell, Friesell Westerlage PLLC, Houston, TX, for Plaintiffs.
David L. Plaut, J. Todd Key, Hanna & Plaut LLP, Austin, TX, Mark D. Tillman, Tillman Batchelor LLP, Irving, TX, for Defendant.
Before the Court is Defendant Safeco Insurance Company of Indiana's Motion for Summary Judgment. Doc. 34. For the following reasons, the Court GRANTS in part and DENIES in part Safeco's Motion.
This is an insurance coverage dispute. The basic facts are not much at issue. Plaintiffs owned a home in Richardson, Texas. Doc. 1, Ex. A, Pls.' Orig. Pet. ¶ 11. They insured it with a Texas Homeowner's Policy (Policy) issued by Safeco. Doc. 45, Pls.' Resp. to Def.'s Mot. for Summ. J. ¶ 6 . The Policy was in effect from December 14, 2013, through December 14, 2014. Id.
Towards the end of March 2014, Plaintiffs' washing machine overflowed and flooded parts of their home. Id. ¶ 7. "Plaintiffs dried the home to the best of their ability using towels, a wet vacuum, and rented high-speed water remediation fans, which ran for three days." Id. Plaintiffs believed that their actions would mitigate any damage. See id. ¶ 8. It did not.1 Id.
As a result, Plaintiffs considered repairing the water damage and, while they were at it, making some improvements to the property. Id. To that end, they spoke with a few architects about plans and even applied for a home-improvement loan. Id. But in the end, they decided against repair and opted instead to sell the house. Id.
Plaintiffs listed the property for sale on July 3, 2014. Doc. 35, Def.'s Br. 4. As part of the listing process, Plaintiffs completed and signed a disclosure notice describing the property's condition. Id. at 4–5 (citing Doc. 36, Def.'s App. Supp. Def.'s Mot. for Summ. J. 160:4–161:9 [hereinafter Def.'s App] ). It did not mention any water damage. Id. (citing Doc. 36, Def.'s App. 160:4–15, 179–83, 219:16–220:3). Nevertheless, Plaintiffs entered into a contract to sell the home to Shaddock Caldwell Builder & Developers for $219,300.00 on July 14, 2014. Id. ; Doc. 45, Pls.' Resp. ¶ 9. The transaction closed on July 28, 2014. Doc. 35, Def.'s Br. 5.
But three days before, on July 25, 2014, Plaintiffs—who continued to live at the house for several months after selling it—filed a claim2 with Safeco for water damage from the March washing machine overflow. Doc. 45, Pls.' Resp. ¶¶ 10–11. That claim eventually gave rise to this suit.
Safeco contends—and Plaintiffs do not contest—that Plaintiffs never informed it that their home had been sold and "notified Shaddock Caldwell that they intended to remove a sign identifying the [p]roperty as a lot for sale before insurance adjusters arrived." Doc. 35, Def.'s Br. 6 (citing Doc. 36, Def.'s App. 190:7–191:3, 193:13–16, 207). Safeco, thus operating on the assumption that Plaintiffs still owned the home, inspected and adjusted parts of Plaintiffs' claim for property damage. Id. ; Doc. 45, Pls.' Resp. ¶ 10. After applying the Policy's deductible of $1,879.00, Safeco paid Plaintiffs $176.51. Doc. 35, Def.'s Br. 6 (citing Doc. 36, Def.'s App. 2); Doc. 45, Pls.' Resp. ¶ 11.
Plaintiffs' claim also involved some personal -property damage by the washing-machine overflow. Doc. 35, Def.'s Br. 6. Safeco "sent a letter to Plaintiffs enclosing payment for certain personal property items and attaching an inventory identifying [other] items of property for which [it] needed additional information" before payment could be issued." Id. at 6 (citing Doc. 36, Def.'s App. 122–26). Safeco maintains that Plaintiffs never provided the requested information, and "[a]fter several months of requests by Safeco for Plaintiffs to provide additional information went ignored, Safeco closed the claim." Id. (citing Doc. 36, Def.'s App. 4–5, 130–32, 167:11–22, 168:24–169:3). Plaintiffs, by contrast, opine that Safeco had all the information it needed either in possession or available for inspection but just chose to underpay for their personal property. Doc. 45, Pls.' Resp. ¶ 12.
At any rate, Plaintiffs felt that Safeco "grossly underpaid" them for their claim. Id. So they retained counsel and invoked appraisal. Id. ). Safeco, in turn, designated an appraiser. Id. But before the dispute was resolved by appraisal, Safeco learned that Plaintiffs had sold their home. Id. For that reason, Safeco concluded that appraisal was unnecessary. Id. . Safeco concludes even more so now that Shaddock Caldwell has demolished the house. See Doc. 35, Def.'s Br. 8.
Plaintiffs concluded otherwise, and on that basis filed suit in Texas state court asserting claims against Safeco for fraud, breach of contract, violations of chapters 541 and 542 of the Texas Insurance Code, and breach of the duty of good faith and fair dealing. Doc. 1, Ex. A, Pls.' Orig. Pet. ¶¶ 30–32, 40–53. Safeco removed the case to federal court on diversity grounds.3 Doc. 1, Notice of Removal. Then it moved for summary judgment on all of Plaintiffs' claims. Doc. 34, Def.'s Mot. for Summ. J. Plaintiffs responded. Doc. 45, Pls.' Resp. Safeco replied in turn. Doc. 49, Def.'s Reply Opp'n Pls.' Resp [hereinafter Def.'s Reply]. The Motion is therefore ready for review.
Summary judgment is appropriate "if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). A dispute "is ‘genuine’ if the evidence is sufficient for a reasonable jury to return a verdict for the non-moving party." Burrell v. Dr. Pepper/Seven Up Bottling Grp. , 482 F.3d 408, 411 (5th Cir. 2007). And a fact "is ‘material’ if its resolution could affect the outcome of the action." Id.
The summary judgment movant bears the burden of proving that no genuine issue of material fact exists. Latimer v. Smithkline & French Labs. , 919 F.2d 301, 303 (5th Cir. 1990). Usually, this requires the movant to identify "those portions of the pleadings, depositions, answers to interrogatories, and admissions on file, together with affidavits, if any, which it believes demonstrate the absence of a genuine issue of material fact." Celotex Corp. v. Catrett , 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986) (internal quotation marks omitted). But if the non-movant ultimately bears the burden of proof at trial, the movant may satisfy its burden just by pointing to the absence of evidence supporting the non-movant's case. Id. at 322–23, 106 S.Ct. 2548.
If the movant meets that burden, then it falls to the non-movant to "show with significant probative evidence that there exists a genuine issue of material fact." Hamilton v. Segue Software Inc. , 232 F.3d 473, 477 (5th Cir. 2000) (internal quotation marks omitted) (citing Conkling v. Turner , 18 F.3d 1285, 1295 (5th Cir. 1994) ). And significant probative evidence is just that: significant. See Little v. Liquid Air Corp. , 37 F.3d 1069, 1075 (5th Cir. 1994) (per curiam). "[M]etaphysical doubt as to material facts," "conclusory allegations," "unsubstantiated assertions," or a mere "scintilla of evidence" will not do. Id. (internal citations and quotation marks omitted). Rather, "the non-movant must go beyond the pleadings and present specific facts indicating a genuine issue for trial." Bluebonnet Hotel Ventures, L.L.C. v. Wells Fargo Bank, N.A. , 754 F.3d 272, 276 (5th Cir. 2014) (citing Celotex , 477 U.S. at 324, 106 S.Ct. 2548 ).
To be sure, the Court views evidence in the light most favorable to the non-movant when determining whether a genuine issue exists. Munoz v. Orr , 200 F.3d 291, 302 (5th Cir. 2000). The presence of cross-motions does not change this approach: The Court will "review each party's motion independently, viewing the evidence and inferences in the light most favorable to the nonmoving party." Ford Motor Co. v. Tex. Dep't of Transp. , 264 F.3d 493, 498 (5th Cir. 2001). But it need not "sift through the record in search of evidence to support a party's opposition to summary judgment." Ragas v. Tenn. Gas Pipeline Co. , 136 F.3d 455, 458 (5th Cir. 1998) (quoting Skotak v. Tenneco Resins, Inc. , 953 F.2d 909, 915–16 & n.7 (5th Cir. 1992) ). Simply put, the non-movant must "identify specific evidence in the record" and "articulate the precise manner in which that evidence supports [its] claim." Id. If it cannot, then the Court must grant summary judgment. Little , 37 F.3d at 1076.
There are, as mentioned above, a number of claims at play here. But as laid out below, most more or less turn on a single question: Did Safeco breach the terms of the Policy when it denied Plaintiffs' claim?
To recap, Plaintiffs' washing machine overflowed and flooded parts of their home. They believed that their initial efforts to contain the water damage were successful but, before long, realized that they were not. After weighing their options, Plaintiffs decided to sell the house rather than repair the damage. The house sold in a matter of weeks. But a few days after the closing, Plaintiffs, who continued to live in the house for a few months until Shaddock Caldwell demolished it, filed a claim with Safeco for water damage from the washing machine overflow.
Safeco now argues that Plaintiffs' breach of contract claim should be dismissed for two reasons. First, Safeco contends that Plaintiffs have no insurable interest because they sold the house. Doc. 35, Def.'s Br. 8. Second, Safeco maintains that,...
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